From ‘big box’ to small format: Ikea to roll out ‘city-centre concept’ stores globally

Ikea opened a new city-centre concept store in Paris on Monday as the Swedish furniture giant tries a new strategy for winning over urban consumers that will be rolled out internationally this year.

The Paris outlet at Place Madeleine, a short walk from the bottom of the Champs-Elysees avenue, is four times smaller than Ikea’s typical blue-box megastores, which are usually located on cheaper land on the edge of cities.

“It’s a test laboratory. From the opening, we will start learning,” the chief executive of Ikea’s parent group, Jesper Brodin, told AFP. “The idea is that the concept of La Madeleine will go to Milan to New York to Tokyo if we are successful.”

The Swedish furniture giant already has city centre stores in Madrid and Stockholm, but they sell single product lines such as kitchens rather than the full range of items which will be offered in the Paris outlet.

Ikea operates four out-of-town stores in the French capital region and offers a free bus service for Parisians living in central areas to reach them.

“We have known for many years that there are many people living in the city centre of Paris who don’t have a car or don’t have enough time to interact with Ikea in the big shops, so this is a declaration of love to them,” Brodin said.

Ingka Group, the Ikea parent group, reported Wednesday a 40 percent drop in annual net profit last year, citing major investments in its online business and its foray into city centres.

For its fiscal year of September 2017-August 2018, Ingka Group reported sales of 37 billion euros ($42 billion) and net profit of 1.47 billion euros.